Pope Pius begins with a reminder of the basis of the unity of humankind:
that law of human solidarity and charity which is dictated and imposed by our common origin and by the equality of rational nature in all men, to whatever people they belong, and by the redeeming Sacrifice offered by Jesus Christ on the Altar of the Cross to His Heavenly Father on behalf of sinful mankind.
But this doesn't mean that nations don't have an important place:
And the nations, despite a difference of development due to diverse conditions of life and of culture, are not destined to break the unity of the human race, but rather to enrich and embellish it by the sharing of their own peculiar gifts and by that reciprocal interchange of goods which can be possible and efficacious only when a mutual love and a lively sense of charity unite all the sons of the same Father and all those redeemed by the same Divine Blood.
There is no contradiction between the unity of the human race and our membership of nations - that is what Pope Pius is emphasising here.
To further underline the point Pope Pius goes on to say:
The Church of Christ, the faithful depository of the teaching of Divine Wisdom, cannot and does not think of deprecating or disdaining the particular characteristics which each people, with jealous and intelligible pride, cherishes and retains as a precious heritage.
And then this:
The Church hails with joy and follows with her maternal blessing every method of guidance and care which aims at a wise and orderly evolution of particular forces and tendencies having their origin in the individual character of each race, provided that they are not opposed to the duties incumbent on men from their unity of origin and common destiny.
The balance here is good. We cannot treat those not of our tradition in any way we like, as we share a common humanity; however, the church blesses the effort to wisely develop the unique tradition we belong to.
Pope Pius then goes on to speak about the proper role of the state:
Hence, it is the noble prerogative and function of the State to control, aid and direct the private and individual activities of national life that they converge harmoniously towards the common good. That good can neither be defined according to arbitrary ideas nor can it accept for its standard primarily the material prosperity of society, but rather it should be defined according to the harmonious development and the natural perfection of man. It is for this perfection that society is designed by the Creator as a means.
The state should not be "something ultimate to which everything else should be subordinated and directed". In particular, the state should not usurp the role of the family. Parents have an important and independent role in guiding the formation of their children:
Undoubtedly, that formation should aim as well at the preparation of youth to fulfill with intelligent understanding and pride those offices of a noble patriotism which give to one’s earthly fatherland all due measure of love, self-devotion and service.
